Bitcoin dropped below $77,000 on Friday after Fed Chair Kevin Warsh's Jackson Hole speech revived rate-hike fears, triggering nearly $488 million in crypto liquidations. XRP fell alongside it as traders repriced the odds of a September increase.
Bitcoin fell below $77,000 Friday, dropping as low as $76,909 before recovering to $77,712, down about 4% over the previous 24 hours, after Federal Reserve Chair Kevin Warsh revived the threat of higher interest rates in a Jackson Hole speech. The remarks accelerated a broader crypto deleveraging.
CoinGlass recorded $487.68 million in liquidations across the market over the previous 24 hours, affecting 97,691 traders, with more than $200 million of positions closed within one hour of the speech. Long positions accounted for more than $360 million of the losses, and Bitcoin positions alone generated about $141 million of the total.
Warsh calls financial conditions too loose
Warsh argued that inflation remains too high even after better price readings this summer. He pointed to the Fed's preferred inflation gauge, which is running at 3.7% over the past year and at a 4.1% annualized pace over the past six months, both above the central bank's 2% target. According to Warsh's Jackson Hole remarks: "I would be hard pressed to describe broad financial conditions as restrictive."
Following the speech, traders lifted the probability of a September rate increase to about 60% from roughly 35%, while short-term Treasury yields rose and the dollar strengthened. That combination of a resilient economy and elevated inflation gives the Fed more room to consider another rate hike rather than the looser conditions markets had been anticipating.
XRP slides on the same signal
XRP also came under pressure, dropping to around $1.38, down roughly 5% over the past 24 hours, according to CoinGecko data, after trading as high as $1.47 earlier Friday. The token still holds a gain of roughly 39% over the past month despite the reversal.
More volatility ahead as the Fed withholds guidance
Warsh stopped short of committing to a September hike, leaving incoming data to determine the Fed's next move. Apollo Global Management Chief Economist Torsten Slok has argued that this approach could push more interest-rate moves outside Fed meeting days as investors continuously reprice economic data instead of waiting on policymakers.
Sources: CryptoSlate, U.Today
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